Savings and Investments

Bonds

What affects bond prices?

Bond prices move in the opposite direction of interest rates. So when interest rates rise, bond prices fall, and vice versa. If you buy the bond at a discount and hold the bond for the full term, you will get all of your money back plus interest.

A bond is just like an IOU, except that it also pays interest. Bonds can be safer than stocks for investors, but they usually pay lower interest rates, as well.